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This chapter dissects the exceedingly dense and highly abstract material from which the Keynes-Hayek debate derived its popular fame, namely, the counterreviews of A Treatise and Prices and Production, the ensuing correspondence between Keynes and Hayek, and the highly critical review of Hayek’s work by Keynes’s Cambridge colleague Piero Sraffa. The chapter finds that, far from fundamental disagreements of economic vision, the debate was in fact characterized by technical arcana, and often almost impenetrably abstruse disputes over definitions and terminology. Ultimately, however, the...

This chapter dissects the exceedingly dense and highly abstract material from which the Keynes-Hayek debate derived its popular fame, namely, the counterreviews of A Treatise and Prices and Production, the ensuing correspondence between Keynes and Hayek, and the highly critical review of Hayek’s work by Keynes’s Cambridge colleague Piero Sraffa. The chapter finds that, far from fundamental disagreements of economic vision, the debate was in fact characterized by technical arcana, and often almost impenetrably abstruse disputes over definitions and terminology. Ultimately, however, the conclusion of the chapter is that the Keynes-Hayek-Sraffa controversy helped clarify some thorny issues in the Wicksell connection, particularly concerning the capital theory and the meaning of Wicksell’s natural rate.